U.S. index futures fell in pre-market trading on Wednesday as investors await the August inflation report and assess the presidential debate between Donald Trump and Kamala Harris.
At 5:24 AM, Dow Jones futures (DOWI:DJI) fell by 199 points, or 0.49%. S&P 500 futures lost 0.41%, and Nasdaq-100 futures dropped 0.46%. The 10-year Treasury yield stood at 3.609%.
On the U.S. economic agenda, the August Consumer Price Index (CPI) data will be released at 8:30 AM, with a monthly increase forecasted at 0.2%, repeating the previous figure. The annual CPI is expected to show a 2.6% rise compared to the previous 2.9%. The core CPI, excluding volatile items, is also projected to rise 0.2% in August and 3.2% annually, in line with the previous report.
In commodities, oil prices rose as concerns over Hurricane Francine disrupting U.S. production outweighed Tuesday’s sharp drop and OPEC+ demand revisions. The U.S. crude oil inventory decline and rising Chinese imports helped boost prices.
West Texas Intermediate crude for October rose 2.33% to $67.28 per barrel, while Brent for November rose 2.05% to $70.61 per barrel.
Gold (PM:XAUUSD) rose for the third consecutive day, trading at around $2,5253.97 an ounce, as U.S. inflation data awaited could signal the size of future Federal Reserve rate cuts. Investors are closely watching labor market weakness, which could lead to rate cuts and benefit gold.
Iron ore is testing support at $90 per ton after falling to its lowest level in almost two years. The decline is driven by a slowdown in China’s steel sector, saturating the market. While major miners like BHP and Vale can withstand low prices, smaller producers may be forced to close.
Asia-Pacific markets retreated on Wednesday. Japan’s Nikkei 225 fell 1.49% to 35,619.77, marking its eighth consecutive day of losses, while the Topix dropped 1.8%. South Korea’s Kospi fell 0.4%, but the Kosdaq rose 0.46%. In Australia, the S&P/ASX 200 fell 0.3%. Hong Kong’s Hang Seng dropped 0.65% in final trading, and China’s CSI 300 fell 0.3%.
Shares of Asian lithium producers surged after rumors that CATL halted production at a major mine in China, alleviating concerns over excess supply. The stoppage could reduce monthly lithium carbonate output, pushing prices up as much as 23% by year-end, according to Bloomberg. Among the companies, Tianqi Lithium shares jumped in Hong Kong, while Pilbara Minerals (ASX:PLS) shares rose 14.5% in Sydney.
Shares of Star Plus Legend Holdings, backed by pop star Jay Chou’s mother, plunged 73% on Wednesday for no clear reason. The price fell below IPO levels for the first time since listing in July 2023. Trading volume was 43 times the daily average. The company, known for products associated with Chou, saw its market cap drastically shrink in three days.
In Japan, business confidence among large manufacturers fell to a seven-month low in September, impacted by weak demand in China, according to a Reuters survey. Additionally, the services sector also saw a decline in optimism, although there are signs of recovery in some segments, like semiconductors.
The Bank of Japan may raise interest rates if inflation continues as projected, despite the recent market downturn. Monetary authority Junko Nakagawa highlighted the bank’s need to consider market volatility when making decisions. With core inflation at 2.7% and economic data showing growth, the yen strengthened, and further rate hikes may occur by year-end.
Mitsui announced it would double its share buyback spending to 400 billion yen ($2.84 billion), aiming to acquire and cancel up to 6% of its outstanding shares. The company has already repurchased 2.64% of its shares and plans to continue until February 2025.
In India, Prime Minister Narendra Modi highlighted the ambition to expand its electronics sector to $500 billion by the end of the decade. At a semiconductor event, he praised the country’s potential, which currently has a $155 billion electronics market.
India faces a challenge to become a reliable alternative to China as an industrial hub, due to bilateral tensions, according to Reuters. Since the 2020 conflict, the Indian government imposed restrictions on Chinese investments but is now looking to ease these barriers to attract more capital and technology, crucial for high-tech sectors.
Additionally, Ford (NYSE:F) is in discussions with the Indian state of Tamil Nadu to resume vehicle production with a focus on exports. The automaker halted manufacturing in India three years ago due to low sales but is now considering using its Chennai plant to produce electric cars for export.
In South Korea, the unemployment rate fell to a record 2.4% in August, seasonally adjusted, from 2.5% in July. This is the lowest rate since the series began in June 1999, according to Statistics Korea.
The Reserve Bank of Australia (RBA) reported that the labor market is adjusting, with a moderate slowdown in demand due to high interest rates. While unemployment rose to 4.2%, there are still signs of a tight market and recovery in migration and labor force participation, according to Sarah Hunter of the RBA.
European markets are trading higher, driven by anticipation of U.S. inflation data due later. In July, the UK economy remained flat, with lower-than-expected growth of 0.2%. GDP did not grow in June and saw a slight 0.5% increase over the last three months. The services sector grew by 0.1%, while production and construction fell by 0.8% and 0.4%, respectively.
Amazon Web Services (AWS) revealed plans to invest £8 billion in the UK over the next five years to increase data center capacity. The initiative is expected to contribute £14 billion to the UK’s GDP and create more than 14,000 jobs.
Shares of Inditex, Zara’s parent company, rose as sales rebounded, while Rentokil (LSE:RTO) shares fell more than 18% due to lower-than-expected sales in North America.
Shares of Commerzbank (TG:CBK) jumped 17% after UniCredit (BIT:UCG) acquired a 9% stake, fueling speculation about a potential merger. UniCredit bought 4.5% of Commerzbank from the German government and the remainder on the market. Meanwhile, UniCredit shares rose 1.7%. Germany still owns 12% of Commerzbank.
Abu Dhabi National Oil Company (ADNOC) plans to offer approximately $15.90 billion to acquire Covestro (TG:1COV), including debt. After a year of monitoring, ADNOC made an improved offer, leading Covestro to open its data for negotiations.
LVMH (EU:MC) is in talks to become a principal sponsor of Formula 1, promoting its brands like Tag Heuer and Moët & Chandon. LVMH plans to announce the deal before year-end. The agreement, potentially worth $150 million annually, represents direct competition with current sponsor Rolex.
In August, Germany saw a 10.7% increase in insolvencies compared to the previous year, according to statistics office data. Since June 2023, insolvencies have risen at a double-digit rate, except for a slight dip in June 2024. In the first half of 2024, corporate insolvencies rose by 24.9%, with transportation, construction, and business services sectors being the most affected.
On Tuesday, U.S. stocks had a volatile session, driven by anticipation of inflation data. The Nasdaq rose 0.84%, closing at 17,025.88, while the S&P 500 gained 0.45%, reaching 5,495.52. However, the Dow Jones dropped 92.63 points (-0.23%), closing at 40,736.96. Banking stocks saw sharp declines, with the KBW Bank Index falling 1.8%.
CME Group’s FedWatch tool estimated a 69% chance of a 25-basis-point rate cut and a 31% chance of a 50-basis-point cut at the Federal Reserve’s next meeting.
The debate between Donald Trump and Kamala Harris was heated and contentious. It began cordially with Trump and Harris exchanging greetings but ended with each going in opposite directions. During the second half, Harris spoke more than Trump, but he continued to dominate the conversation, discussing topics such as immigration and border policies. Harris also attacked Trump on his legal issues and his positions on Israel.
Following the debate, Taylor Swift expressed her support for Harris, praising her commitment to important causes. Although the race remains close, Harris’s performance could positively influence her electoral chances in the coming days.
The debate brought little clarity on key political issues like tariffs and taxes. Despite Harris gaining slightly in election forecasts, the impact on markets was modest. Investors remain primarily concerned about the U.S. economy and potential Federal Reserve actions, reflecting reduced short-term volatility.
Before the market opens, quarterly reports from Manchester United (NYSE:MANU), Hepsiburada (NASDAQ:HEPS), Designer Brands (NYSE:DBI), Vera Bradley (NASDAQ:VRA), and Tsakos Energy Navigation (NYSE:TEN) will be released.
After the close, numbers from Oxford Industries (NYSE:OXM), Lesaka Technologies (NASDAQ:LSAK), and more are expected.